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The Vice Guide to Becoming a $3 Billion Company

At some point you have to stop thinking of Vice Media as an “alternative” media source, considering how thoroughly pervasive their brand has become. Like the near-meaningless designation “alternative music,” when the alternative become the mainstream it’s pretty difficult to call it anything but the new establishment.

But we’re still talking about Vice, right? The former Montreal street fashion rag, given to provocative columns and even more provocative photography from Terry Richardson?

Ah, but the days of Vice being nothing but a snarky, willfully abrasive, independent magazine are long gone. Vice is a bonafide media empire, funded by Rupert Murdoch, with a show on HBO, a thriving online TV station and a penchant for engrossing, high-quality gonzo journalism.

And Terry Richardson? Despite his unsavory personal reputation, he is now regularly included in the pantheon of the world’s top-tier high fashion photographers. Vice, and Vice’s earliest contributors like Richardson, long ago moved out of the underground and have in the process found massive success. Mainstream success, success that not only rivals traditional media outlets, but is poised to completely overtake it.

$1 Billion Revenue in “12-18 Months”

Vice’s foray into the big leagues of media has proven so successful that Time Warner (TWX) is mulling an investment in Vice that would value them at $3 billion. Not bad for a company founded with a small Canadian government make-work loan just 20 years ago.

While it’s always easy to hyperbolically overestimate the potential of a hot property, Smith looks to be onto something. What separates his company from many of wildly overvalued companies is the fact that, unlike most “alternative” properties, Vice is fully monetized. That is, they’re as traditional as a business can come. Unlike other highly-valued private tech companies like Snapchat, Vice actually makes money.

Because of the fact Vice is currently a) raking in hundreds of millions in cash and b) is profitable, CEO Shane Smith thinks his media empire is worth $3 billion – at least. He has stated he actually thinks they’re worth several times that.

And he’s right.

Vice: (Branded) Content is King

In an interview with Bloomberg, Smith claimed he expected Vice to rack up $1 billion in annual revenue “within 12 to 18 months.” That’s more than Twitter (TWTR) , which led Smith to reason his company’s future value is far larger than Time Warner’s valuation.

So we’re talking about a profitable, cusp-of-mainstream media empire. A news empire, to be exact. This in an age where news is, you know, dead.

Or at least struggling. How Vice has been able to monetize is by thoroughly embracing video over written word. But the real key to their success has been via the branded content model, or overseeing the unholy marriage of advertising and content.

Rather than court advertisers to appear on the fringes of the content (although they certainly do that) Vice creates content funded by benefactors. Example: Intel’s (INTC) The Creators Project, a global arts project funded by the tech giant, produced by Vice. Other clients of Vice include Absolut, Palladium, and North Face, who bought an entire video series on Vice called “Far Out.”

A sponsored video series on Vice costs a corporation between $1-$5 million. And with a brand that’s getting 200 million unique visitors a month divvied up between their various properties, corporation appear more than willing to pony up for the content/advertising hybrid Vice peddles.

This Section of the Article is Brought to You by General Electric (GE)

The branded content model is not without controversy. Branded content carries a definite stigma in journalism, as the ability for companies to directly meddle in content can certainly be a conflict of interest concerning the integrity of said content. By the way, has anyone enjoyed one of General Electric’s products lately? I myself just used one of their lightbulbs the other day, and it was fantastic.

Smith is touchy about the subject, responding in an interview with The Guardian that “(Vice doesn’t) do branded content, we do content sponsored by brands.” The implication being that they can take Intel’s money, but Intel can’t tell them what to do.

Regardless of his assertions, the one thing regarding the branded content model that is undisputable is that companies seem to like it. Vice’s ability to monetize is unparalleled. There’s a reason why they are set to make more money that Twitter. Advertisers don’t want to buy sponsored tweets or promoted posts; they want to sponsor people making those tweets or posts that are already popular.

A new media advertiser’s goal is to target that advertising as effectively as possible. One of the best ways to do this is to disguise the advertising in content people like. With “content sponsored by brands,” the advertiser’s message no longer exists on the fringes, but is folded into its very framework.

The content is the sugar that helps the medicine go down. It’s an advertising delivery system as innovative as a GE front-load washer.

Making Money? That’s a “Do”

But it’s not an entirely new one. Media empires have been utilizing sponsors since the '50s, when nary a program wasn’t brought to you without the say-so of Geritol or Lucky Strike. Fitting that a company who first found fame judging the throwback street fashion favored by young metropolitan urbanites would also embrace a decidedly retro approach to funding their content.

Their sponsored content, that is. Thoroughly profitable sponsored content. Whether or not Vice’s sponsored content model means the content is inherently biased does not change the fact that Vice is making boatloads of cash. Vice’s edgy content, whether or not they are still underground or hip is beside the point. They are very good at making money, and for the Time Warners and Rupert Murdochs, that’s the coolest thing in the world.

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